2010 Roth IRA Conversion Opportunity

What is a Roth IRA Conversion?

It is when you convert your Traditional IRA to a Roth IRA. The main benefit is the future earnings are now tax-free once in a Roth IRA. However, in order to convert you need to pay income tax on the money coming out of the Traditional IRA in the year it is converted.

Starting in 2010 there are two big changes with regard to Roth IRA Conversions:

1. Now anyone can convert (previously if you made over 100k, you were not allowed). This change is open-ended.
2. For 2010 only, the amount converted will not be included in your 2010 income taxes, but ½ in 2011 and ½ in 2012.

So does it make sense to convert your IRA in 2010? Maybe, it depends on your situation. But with these changes listed above, now is the time to start planning and evaluating. Call Park Avenue Wealth Management at 734-432-1966 to rewiew your options today!